Management

of
Sales Territories
Learning Objectives
To understand the concept and reasons
for sales territories
To learn designing sales territories and
assigning salespeople
To know territory coverage, including
routing, scheduling, and time management
Sales Territories
A sales territory consists of existing and potential customers,
assigned to a salesperson
Most companies allot salespeople to geographic territories,
consisting of current & prospective customers
In defining territory the key word is customer, not geographical
area. For Example: Insurance Business salespeople sell policies to
relatives, irrespective of geographic location.

Major Reasons / Benefits of Sales Territories
Increase market / customer coverage
Control selling expenses and time
Enable better evaluation of salesforce performance
Improve customer relationships
Increase salesforce effectiveness
Improve sales and profit performance
Reasons for not setting up Sales Territories
A small company with one or two salesperson
selling in local market
Personal contacts/ relationship based selling
(network marketing)
In the case of strategic accounts. In a strategic
accounts program, managers are assigned a
limited number of accounts, perhaps only one.
Firms using telemarketing and internet
marketing as tool to reach customers.


Factors affecting size of sales
territory
Consumer durable with a longer shelf life,
the company may prefer to have a larger
territory compared smaller territories for the
perishable commodities.
When there is huge demand in the market for
the product, the companies decide on designing
smaller territories so that the salespeople can
cater to the customers and provide adequate
service to them within a limited geographical
area.
Contd..
When companies decide to go through
intermediaries like wholesalers, who manage
distribution to the retailers they prefer to have
larger territory.
In situations where bulk order booking is
done by a sales person, or in situations where a
company also handles the retailers, the size of
territory is kept small.
Similarly a better, cheaper, efficient, and
faster transportation and communication
facility make companies decide whether or not
the territories of the salespeople are large
enough to take advantage of these facility.

Procedure for Designing Sales Territories
Select a control unit*
Find location and potential of present and prospective
customers within control units**
Decide basic territories by using
Build-up method,
(equalises the workload of salespeople, Industrial
products, selective distribution strategy)
Or
Break-down method
(equalises the sales potential of territories, consumer
goods, intensive distribution strategy)
*A control unit is a geographical territorial base
(States, cities, town, pin-code)
**Unnecessary & expensive for consumer products
Procedure in Build-up Method
Decide customer call frequencies
(Profit potential, cost of visiting, buying behaviour, nature of product)
Calculate total customer calls in each control unit
Estimate workload capacity of a salesperson
(maximum no of calls per day X Total working days)
Make tentative territories
Develop final territories
Objective is to equalise the workload of salespeople
Example of call Frequency & Customer Visit
District X District Y
Customer
Type
Call frequency
(Per month)
No. of
Customer
No. of
Calls
(Per year)
No. of
Customer
No. of
Calls
(Per year)
A 4 3 144 4 192
B 2 7 168 8 192
C 1 20 240 28 336
30 552 40 720
Estimation of workload capacity of a
sales person:
5 calls per day X 250 working days=1250
Tentative territories
Dist X + Dist Y = 552+720 = 1272
Almost equal to the workload of a salesperson
So Dist X and Dist Y should be combined
to one territory
Procedure in Breakdown Method
Estimate company sales potential for total
market (by using suitable forecasting method)
Forecast sales potential for each control unit
(total sales potential of company X factor buying index of each control unit)
Estimate sales volume expected from each
salesperson
Make tentative territories
Develop final territories
Objective is to equalise sales potential of territories
Assigning Salespeople to Territories
Sales Manager should consider two criteria:
(A)Relative ability of salespeople
Based on key evaluation factors:
(1) Product knowledge, (2) market knowledge,
(3) past sales performance, (4) communication,
(5) selling skills
(B) Salespersons Effectiveness in a Territory
Decided by comparing social, cultural, and physical
characteristics of the salesperson with those of the
territory
Objective is to match salesperson to the territory
Evaluation of Relative ability of a salesperson/ Ability index
Evaluation Factors Weightage Evaluation
Salesperson
Score
Product
Knowledge 0.15 0.9 0.135
Market Knowledge 0.1 0.8 0.08
Past sales
performance 0.4 1 0.4
Communication 0.15 0.8 0.12
Selling Skills 0.2 0.9 0.18
1 0.915
Management of Territorial Coverage
It means: How salesperson should cover the
assigned sales territory
It includes three tasks for a sales manager:
Planning efficient routes for salespeople
Scheduling salespeoples time
Using time-management tools
Routing
Routing is a travel plan used by a salesperson for
making customer calls in a territory
Benefits of or Reasons for routing:
Reduction in travel time and cost
Improvement in territory coverage
Importance of routing depends on the application:
Nature of the product Important for FMCG
Type of jobs of salespeople Important for
driver-cum-salesperson job, but creative selling
job needs a flexible route plan
Procedure for Setting up a Routing Plan
Identify current and prospective customers on a territory
map
Classify each customer into high, medium, or low sales
potential
Decide call frequency for each class of customers
Build route plan around locations of high potential
customers
Computerised mathematical models are developed
Commonly used routing patterns are:

B
Circular
B
Clover Leaf
Base
(B)
C5
C1
C4 C3 C2
Straight line / Hopscotch
Scheduling
Scheduling is planning a salespersons visit time to
customers. It deals with time allocation issue
How to allocate salespersons time?
Sales manager communicates to salesperson major
activities and time allocation for each activity
Salesperson records actual time spent on various
activities for 2 weeks
Sales manager and salesperson discuss and decide
how to increase time spent on major activities
Companies specify call norms for current customers,
based on sales and profit potentials, and also for
prospective customers
Salespeople's Task Time spent (%)
Administrative task 15
Service calls 13
Face to face selling 32
Waiting/ Travelling 21
Telephone selling 19
100
Time Management Tools
To help outside salespeople* to manage their time
efficiently and productively, the tools available are:
High-tech equipment like laptop computers and
cellular phones
Inside salespeople to provide clerical support,
technical support, and for prospecting, and
qualifying, as they remain within the company
Outside salespeople can then spend more time
getting more orders & building relationships with
major customers
*Outside salespeople travel outside the
organisation
Time & Task Management
Task Management: Problems
NOT DOING THINGS AT THE RIGHT TIME
Crises, fire fighting
NOT DOING THINGS RIGHT AT THE RIGHT
TIME
Rework, poor image projected
NOT DOING RIGHT THINGS RIGHT AT THE
RIGHT TIME
Non-achievement, expected output does not occur
Task Management: Solutions
LIST ALL TASKS
SEPARATE INTO URGENT & NOT
URGENT
FOR EACH GROUP, CLASSIFY AS
IMPORTANT & NOT IMPORTANT
TREAT DIFFERENT TYPES OF TASKS
DIFFERENTLY.
Task Management: Solutions


URGENT
NOT
URGENT
Q1
IMPORTANT
NOT
IMPORTANT
Q2
Q3 Q4
Task Management: Solutions


URGENT
NOT
URGENT
CRISIS /
STRESS
IMPORTANT
NOT
IMPORTANT
PLANNED /
QUALITY
DECEPTION WASTE
OF TIME
Time & Task Management
URGENT
Do it now
NOT URGENT
Do it later
IMPORTANT
Spend a lot of time
NOT IMPORTANT
Spend little time
TIME Planning Formula
T Things to do

I Identify priority activities and allocate time

M Make them happen

E Evaluate and measure progress
Very Short But Amazing Speech
by Coca Cola CEO Bryan Dyson













"Imagine life as a game in which you are juggling
some five balls in the air. You name them - Work,
Family, Health, Friends and Spirit and you're keeping
all of these in the Air.

You will soon understand that work is a rubber ball. If
you drop it, it will bounce back.

But the other four Balls - Family, Health, Friends and
Spirit - are made of glass. If you drop one of these;
they will be irrevocably scuffed, marked, nicked,
damaged or even shattered. They will never be the
same. You must understand that and strive for it."

WORK EFFICIENTLY DURING OFFICE
HOURS AND LEAVE ON TIME. GIVE THE
REQUIRED TIME TO YOUR FAMILY,
FRIENDS & HAVE PROPER REST.